Avanti Communications Share Discussion Threads

[wilksey1] 21/11/2012 11:40

link here for some radio interveiws with david williams.. apologies if already seen.

[jeffian] 21/11/2012 00:27

chrissey,

Whilst I wasn't over-impressed by the brokers' readjustment of their previous guidance, it beggars belief that AVN "could be out of business within 12 months".

They do have something like one quarter of a billion£ worth of satellites floating around up there (one of which is sufficiently valuable to have one of the world's biggest sat operators try to take the slot off them) and a commitment from ESA in respect of the third under development. The cost/value of these sats is greater than their debt, so insolvency is not at issue. On what basis, then, could they be "out of business"?

[chrissey] 21/11/2012 00:10

if the FT250 was fantasy football, this stock is indeed Fernando Torres, both could be out of business within 12 months.

[aa29] 21/11/2012 00:00

^ Have to consider an alternative view carefully but to me, if he dismisses P & L projections as meaning less than nothing then surely the debt projections that feed off revenue and profit figures (to a large extent) have to be dismissed too for consistency so that's a flaw in his argument.

From what was said at the AGM, this is a fuller report from Cenkos with similar projections to those described as 'comfortably supportable' at the meeting. Projections will be beaten if the company continues to add to backlog at over £11m per month - it has done so for the last ten months.

We know Avanti needs to deliver on sales but it starts this year at £15m, has some deferred income to add straightaway and needs to find around £20m extra this year to beat target. Contracted backlog is £268m (average contract length 4 years-ish IIRC) and being added to monthly. Are they really going to convert less than 13% of backlog into revenue this financial year?

There has been a large scaling back of guidance to brokers as part of the under promise, over deliver policy and I can see the ammunition this gives to shorters but those revenue figures do look very achievable. If they aren't, then we're in the sh1t regardless of what the debt is.

PS Pretty sure the ESA turnover will be via the UK arm of the ESA so within declared UK income rather than European.

[1976yol] 20/11/2012 20:10

Just for you guy's

He make some interesting points.



Tuesday, 20 November 2012
Avanti (AVN) ... forecasts going wrong way
This morning, the latest broker forecasts for Avanti's financials appeared in my inbox. For anyone with access to Bloomberg, they are readily available there. For those that do not have access to Bloomberg, I have put them into some charts below; the broker's identity remains anonymous.

What is remarkable is the degree to which the forecasts from this broker have changed inside of five months. In July last, the broker confidently projected revenue of £56.5m to June 2013, rising to £102m to June 2014, and £138.2m to June 2015. Now it forecasts (no doubt as confidently) revenue of £34.5m to June 2013, rising to £68.2m in June 2014, and £110.5m to June 2015. Further, whereas back in July the broker projected AVN to report EBITDA to June 2013 of £35.9m, the forecast is now for £11.4m.

In the light of the material change to this broker's projections for AVN's financials in less than five months, I reckon the latest P&L projections mean less than nothing. However, what I would pay attention to is the net debt forecast. This has risen substantially. In July, the broker was forecasting net debt to finish at £82.7m to June 2013. This morning it projects net debt to now be £58.2m higher at £140.9m to June 2013. Moreover, five months ago it forecast net debt to June 2014 to fall to £31.2m. This morning's update sees net debt now being £97.0m higher than that at £128.2m.

Given the direction with which the this broker is adjusting its P&L forecasts while raising its net debt projections, it is probably understandable why I remain short.

On another note, specifically "Note 2. Revenue" on page 48 of Avanti's recent set of accounts, I would appreciate it if anybody could provide some clarity on my understanding of it. As highlighted below, AVN reported £12,461,000 (2011: £5,462,000) of revenue in 2012. Further, my understanding is that revenues from the European Space Agency (ESA - with whom AVN have received funding) represents 36.1% (2011: 20.6%) of this, or c. £4,498,421 (2011: c. £1,125,172). These figures are remarkably close to those in the final paragraph of note 2, where the group highlights that £4,471,000 (2011: £1,081,000) of its turnover was from European countries outside the UK. Does this mean that apart from the ESA, the group had virtually no revenue attributable to outside the UK during 2011-12? That's what it looks like to me, but I would welcome others views.

[rathlindri] 20/11/2012 19:57

Where's Yorgi?

[lazyj] 20/11/2012 16:41

Apologies - wrong thread!!

[salamanda74] 20/11/2012 14:11

MMs are playing silly beggers with this one today......
They must be having a few tree shakes and picking up some cheap shares
Stuart

[2350220] 20/11/2012 12:22

Some good finds Wilksey.
Thanks for posting.

John

[wilksey1] 20/11/2012 10:30

100% broadband possible with satellite

[bubbleandleek] 20/11/2012 10:24

FROM CENKOS TODAY:

Avanti Communications – value upside
(AVN.L, Price 265p, Mkt. Cap. £296m, BUY)


Following the recent annual results announcement we are publishing a more detailed breakdown of our financial forecasts. The updated estimates we released in October reflected the challenge in predicting the revenue ramp as satellite capacity fills up. However, the monthly win-rate of new business has remained consistent and Avanti is still on track to meet its target dates to sell out both HYLAS 1 and 2. If the company successfully executes this strategy, the share price is compellingly cheap as highlighted by a P/E expected to be only 7.3x in FY15. However at this juncture, HYLAS 2 is only half full and there is no contribution from HYLAS 3. By 2020 and with all three satellites approaching full capacity, EPS could have reached around 120p. The current share price only just reflects the build costs of the fleet and includes nothing for the value of the satellite slots and associated spectrum. A DCF value of c.900p highlights the value potential of a high growth, uniquely placed business.

[nugacity] 20/11/2012 10:00

Seen the spread today? 257p - 270p is a bit rich?

[djmozy2] 20/11/2012 06:06

Avanti completes first installation of Ka-band for DEA

[wilksey1] 19/11/2012 12:16

clearly at this price now this has to be considered as a take over target two sats already up and running and a third paid for an being built,must be a number of suitors all ready running the rule over, now that would be a share price changer.

[aa29] 19/11/2012 10:19

sg31

This situation was raised at the AGM and David Williams was quite dismissive, saying that the issue had already been resolved so I guess they believe this confirmation to be old news and one on which they have already issued an RNS (10 September).

When he discussed it further, he said that this was such a prime slot for satellites (potentially covering Africa, most of Europe, Middle East, a fair bit of Asia and eastern seaboard of US), it was not unexpected that a rival may try and do what they can to gain an advantage.

[2350220] 19/11/2012 10:01

I'm also surprised that this final news hasn't moved the share price one jot.

John

[sg31] 19/11/2012 09:35

I'm surprised AVN haven't issued an RNS about this. PR dept needs a kick up the backside.

[wilksey1] 19/11/2012 08:52

Sun, 18 Nov 2012 16:04:53 GMT

PARIS - International regulators voted Nov. 15 in favor of Britain and Ka-band satellite operator Avanti Communications, and against Luxembourg and fleet operator SES, in a dispute over rights to Ka-band frequencies at 31 degrees and 31.5 east longitude in geostationary orbit.

Meeting in Geneva, the International Telecommunication Union (ITU) Radio Regulations Board ruled in favor of the startup British satellite operator and against the world's second-largest satellite telecommunications provider.

"Each case needs to be considered based on its own merits and particular circumstances," the board said in its assessment of the issue. As it often does, the board invited Britain and Luxembourg, and the two companies, "to cooperate with each other in the spirit of good will and mutual respect to achieve coordination of their satellite systems."

SES had stationed its Astra 3B satellite, launched in May 2010, at 31.5 degrees east and switched on its Ka-band payload for about two weeks before moving the satellite to its assigned slot. SES had hoped to take advantage of the loose regulatory regime that only recently has forced operators to leave satellites at a given slot for at least three months before declaring the slot registered.

The ITU subsequently ruled that the SES maneuver could not be considered as confirming a registration, and that SES's reservation had expired.

London-based Avanti performed a similar maneuver in 2011, stationing its first satellite, Hylas 1, at 31 degrees for 16 days before sending it to its assigned slot.

Avanti's reservation at 31 degrees expired in May. Because of several delays with various causes, the Hylas 2 satellite intended for that position was not launched until August.

Britain's Ofcom, the national telecommunications regulator, urged the ITU to give Avanti the benefit of the doubt, arguing that Avanti is a bona fide satellite operator with verifiable capital investment intended for each of its slots, and that a three-month delay should not scuttle the company's business plan.

SES plans to operate the Astra 5B satellite, with a Ka-band payload, at the 31.5 degrees east position starting in 2013. Luxembourg and SES argued that if SES's 2010 maneuver with the Astra 3B satellite was insufficient to reserve a slot, then Avanti's 2011 attempt should be deemed invalid as well.

A lower-level ITU body had already signaled that it accepted the British/Avanti argument.

The Nov. 16 decision by the Radio Regulations Board said Avanti's stationing of a satellite at the 31.5 degrees position in January 2011 "was within the seven-year regulatory time limit," which had a deadline of May 19, 2012.

ITU officials have said the World Radiocommunication Conference that ended early this year set rules on how long a satellite must stay at a given position - three months has now been accepted -
but that these rules were not formalized until this year.

Satellite positioning before then, ITU has said, has been subject to the regulators' interpretation. In the past, ITU bodies have looked with indulgence on new satellite operators and those from less-developed nations, especially when there is no doubt that a satellite is being built and does not exist only on paper.

That appears to have been the case here. The board concluded that "there was no reservation of orbit and spectrum capacity without actual use."

Hylas 2 has been operating at 31 degrees east since August. SES will now enter negotiations with Avanti from a position of relative weakness. Whether that will affect the operations of the Ka-band payload of Astra 5B - the satellite's main payload is in Ku-band - is unclear

[sg31] 18/11/2012 15:37

Nice find wilksey. That's one slight risk removed. One less stick for the shorters to beat AVN with.

[wilksey1] 18/11/2012 11:45

ITU Rules for Avanti in Frequency Dispute with SES
Nov. 16, 2012
International regulators voted in favor of Avanti Communications, and against SES, in a dispute over rights to Ka-band frequencies at 31 degrees and 31.5 east longitude in geostationary orbit.

[colva] 17/11/2012 05:57

Just noticed the thumbs up thumbs down boxes , i can't say i've noticed them before , nobody seems to be using them but they do work. Thanks AA29 .

[hpcg] 16/11/2012 13:51

Thanks very much for the commentary AA29 - it's one of the few things which make the BBs worthwhile. I agree entirely about the share price as well.